Talking to BW Businessworld recently, Jay stated that he is a big fan of Prime Minister Narendra Modi, who has discerned that the next wave of innovation will be brought in by start-ups.

Jay Krishnan is the Chief Executive Officer of T- Hub, which is an innovation centre for corporates improving their business models, processes, services, and products to stay ahead by running accelerator programs and scouting disruptive technologies. He is also the Managing partner of T- Fund, T-Hub’s accelerator VC fund. Talking to BW Businessworld recently, he stated that he is a big fan of Prime Minister Narendra Modi, who has discerned that the next wave of innovation will be brought in by start-ups.

Please tell me in brief about your business model. And most importantly, what kind of disruption are you creating?

Today, we are the largest incubator in the country. We have over 300 start-ups in our collective portfolio. The two or three revenue streams that feed into our business models are extremely unique. We have done that with the angle of creating a brand new ecosystem in India. First is the incubation itself under which we have about 140 start ups and each start-up pays for a certain set of services that we provide. The second business vertical is what we call corporate innovation which I don’t think anybody else is doing in India right now. What we do is we take problem statements from specific corporates within 4 sectors i.e. Health Tech, Smart Cities, Transportation and Sustainability. So we work with Facebook, Boeing, United Technologies, Samsung, Cisco, Qualcomm, HSBC, to name a few. What these guys do is give us their giant business problems and we break it down into potential engineering solutions and then the start-ups from across the world and not just within our building, offer solution. And what corporates get out of that is they get a solution where they can commercialise and take them out very quickly. We facilitate all that and that is our second revenue stream. The third one is we use start-up exchange with other ecosystems like Israel. What we do there is we have the top 5-6 Indian start-ups going to that ecosystem. Then we have the top 5 Indian start-ups in those ecosystem come to India. T-Hub ends up becoming a gateway for start-ups to go both ways. So the change in the value chain is the piece of disruption we have brought to the market. Within two years, the number of start-ups that we touched is 3,000 which includes 300 in our portfolio incubation and 110 global ones from the corporate innovation.

In India, not many start-ups are running into profits. So does that pose a challenge for you?

I think most people think of that as an anomaly is (that) India start-ups are bleeding cash. But it is not just the Indian start-ups. The trick is to figure out how much cash do you need to get to break-even. And in the case of India, it is very early days. Most people tend to compare India to the US. The right thing would be to compare to the US in the 70s. Because, as a start-up country, we are only 5 years old. As a country that has opened up most (through) liberalisation is only been 20 years. So it is wrong to compare India to the US in the current context. Coming back to your question, every start up bleeds. I have done 3 start-ups in my life. If you don’t bleed, you are not a start-up by definition, but an SME. But unlike SMEs, a start-up, with the right amount of inputs, will grow all of a sudden non-linearly. So the lens through which we need to look at start-ups is fundamentally the broad difference that a) this country is young b) they will lose money. So in my view, it is okay to lose money as long as you are on the method to get to profitability.

But there are start-ups like Snapdeal, Tinyowl, Housing.com, etc., which have folded up. But you are still upbeat?

That is the other thing that people should understand (that) 90% of start-ups have failed globally. Most of the successful funds large accelerator is Y Combinator, which has assets under management to the tune of $50 billion. Their failure rate is 93%. So we are not different. So it is okay to fail. The trick is to figure out are we learning from these mistakes as an investor, entrepreneur, and as ecosystem creators like us. The trick is to figure out we don’t make mistakes again.

As startups embrace technologies like AI, Blockchain, IOT, Cloud Computing, etc., which can eventually replaces jobs, how do you ensure that you generate jobs parallely?

The way to look at it is that humankind has evolved over such a short time. The human species is only 300,000 years old and during these years, we have achieved a lot. And within that, it is literally in the last 100 years that what we have achieved everything we can think of or dream of. So it is okay to innovate (and) have things like AI, IOT, Cloud Computing etc. If there are people using smartphone, they are already using all of these. They are already using cloud, they are already using services to share photos, they are already using AI, they are already using IOT. The question is are you going to take that away. Are you okay to live a life without any of these. And I am only guessing. So the question is this technology go down to the grassroots. We need to make sure (we have) access to farmers, healthcare, education to the poorest provider, etc. And the only way to do is technology. When it comes to replacement of jobs, if in the early 1900s people said I don’t like automobiles because that is going to take away jobs of horse carrying carriages. We stuck to that notion and pushed the government and said please ban automobiles. Because it happened. People said it is going to replace horse-drawn carriages. People in the industrial revolution said anything to do with steam engines should be brought to an end because it takes away 100s of types of jobs from lumber mills cutting wood from people doing blacksmithery work, people doing transportation through ships. If we didn’t say yes to the industrial revolution, we wouldn’t be where we are today. So the lens through which you need to look at this is adoption of new technologies such that we will slowly adapt and make and bring new changes. If we take an extremely socialist response and take knee-jerk reactions to them, the reality is that the world will go ahead and we will stay back. All these examples that I gave you are classic examples in the history of time, where we now have a decision as a country, if we want to move ahead or stay back. If you want to look at just the last 5 years, companies like Ola and Uber provided access to people like drivers to new forms of jobs which they didn’t have. Today we have over 10 million jobs created by these companies where people have the ability to earn lakhs of rupees a month. These guys were unemployable people with no skills till then. So the question to be asked is do we want to fall behind the race and get worried about the loss of jobs which I don’t agree with. Or do you want an approach that says we will now curb start-ups that have technology like AI, Machinery, IOT, etc., to make the masses happy. If that happens, two things will happen a) we will fall behind or b) entrepreneurs that have these amazing technologies will leave this country. So I think that is the les through which this needs to be looked at.

A few months back, the government had clamped down on cryptocurrencies. So was that a progressive step on its part?

Personally speaking, these steps are for the right direction because of two reasons. One, the underline technology that enables cryptocurrency is blockchain. The govt of India has embraced that part of it. They said we will use this technology for agriculture, real estate consultancy, pharmacy, etc. It’s a great move because it is very hard for the government to react that quickly. The government has done a phenomenal job of saying that we will use that piece of the technology and use it. On the crypto part, the challenge that all the govt, including ours has, is when you have new forms of financial instruments coming into play. Once you have a small window through which you legalise it, all of a sudden the de-facto currency which we use which is promissory note in the form of Indian rupees becomes highly volatile. You have now macro-economic trends which say Rupee may get incredibly devalued. Secondly, at the end of the day what you want to do is democratise currency such that you don’t want to have one percent of the population controlling all the wealth, which is today where we are. Cryptos have not necessarily solved the problem. Cryptocyrrency was supposed to do that where is a wealth that is spread out. But it hasn’t solved it. If you look at Venezuela, they are now beginning to talk with other countries that says we will only trade in cryptos. All of a sudden, you suddenly start controlling a new form of currency let’s say Bitcoins and the rest of the masses still don’t have access to it. If you zoom in to bitcoins for example, a very few people have access to it. It becomes a state where you have to mine bitcoins to get the coins. People like common man will not have access to it. The guys who will get access to that will be phenomenal technologists who know how to mine the coins. So with those 3 reasons, I think saying no to cryptos at this point is the right thing to do for the government keeping the interest of the larger public in mind. Why allow for something which majority don’t understand?

What is your stand on digital push by the government?

I broadly stand on the side that we feel that the whole economy has to be digitised for two reasons. One, for the fact that it is been very obvious that the one who controlled money in the last 60-70 years has been the same. There is 1% of the population that controls 90% of the wealth. And there are 90% of the people who do not have access to money. If you look at India broadly, there are 110 million people who are underserved, there are 400 million people in the middle class. There are 110 million people who have a great lifestyle. The trick for all of is to how to get those 100 million to 450 (million) and the 450 (million people) have access to that 100. So the question is how you take black money out of the system. You need to have transparency. In order to have transparency, you need to have accountable methodologies through which everyone would be monitored. You can monitor cash inflow and cash outflow at a personal level and at an institutional level. And with those two levels, I think the whole country has to go digital. The guys who will complain will essentially be those who don’t want to give up their wealth. Interestingly, the guys who are in the informal economy are the underserved. Case in point, my own gardener, driver and maid. They were extremely happy for not being able to get cash for a month as long as it gets to them in a few years’ time. Number two, they see the rich man not getting benefit of that. In the start-up world, this now gave birth to a whole bunch of technologies that brings transparency.

So what are your views on Modi?

Personally, I am his big fan for two reasons and I will give the start-up lens. The lens through which one needs to look at start-ups is to understand that this (industry) is the new farm of asset class that will create jobs. In the last 20 years, what has brought India to the global limelight has been IT services. It is been a function of human capital that can do a certain amount of jobs that are offshored from various parts of the west. But that is how the globe has looked at it. That has not been the driving force of India’s GDP. That is still been services, agricultural and manufacturing. But the next wave of job creation has to be to solve India’s problems. It cannot be to solve the west’s problems. And this country has tonnes of problems like last mile connectivity, transportation, lack of energy, lack of water, lack of infrastructure, etc. So the question is who is going to solve that? We can’t bank on the government to solve every single issue. It has to be local and internal. The beauty that India offers is we have got a treat talent base of technologists. Now to solve these problems on one hand and to have solutions on the other hand, the bridge between the two is start-ups. You can’t bank on the large corporates of India to go and solve these problems. They are doing their own thing. If I am an entrepreneur who has a great piece of technology that says I can solve climate change and you go and build a company around it and create jobs here, you hire people that is the way of the future. To enable all these things, the government needs policies that says, if you are a start-up, I am going to give you XYZ, If you are an IT services company, you are going to get an A,B and C. You need to come up with a policy that distinguishes between the SME and a start-up. Therein lies the start-up India policy. Does it have issues? Yes, initially? But anything in life the first few months, if not years, will have issues. But at least you now have a policy that says I will start now to identify start-ups. Then you create another policy that says I will now allow you to scale up. Create another policy that says I will now allow you to attract capital. In another year, you come out with a policy that says the amount of capital that has gone into the start-ups now has to return profits. But those will come. But atleast we have started. Therefore I think while the leher (wave) is there, atleast the man (PM Modi) has the vision to identify that the next wave of innovation will be (brought in by) start-ups and the next problems that India has internally will potentially be solved by Indian start-ups. Therefore, all these policies that are in play will take time and it will take its shape itself.

Lastly, what is your vision for the company?

(Aiming) to be the top 10 start-up destinations globally in the next three years. For India, we are already in the top 3 start-up nations now. I think the trick is for our start-ups to solve India’s challenges. That is something which is hopefully exciting. As opposed to aping the west, if we start focussing on our problems, I think things will be far more interesting.